Chris Koney’s column: Protecting farmers, powering growth: Why Insurtech is crucial for agricultural future

Ghana faces significant challenges in agriculture. The country has fertile land and a vibrant farming community. However, it is vulnerable to climate shocks and structural issues.

Agriculture contributes about 20% of Ghana's GDP. It also employs over a third of the workforce. For many rural communities, farming is a way of life. Unfortunately, this way of life is under increasing pressure.

Erratic rainfall, droughts, floods, and pests make farming unpredictable. Rising input costs add to the difficulties farmers face. As climate change worsens, farmers become more vulnerable.

Ghana has made progress in mechanization and digital agriculture. However, risk protection remains a critical gap. Innovative insurance models are needed to support farmers.

Parametric insurance could be a game-changer for Ghanaian farmers. Unlike traditional insurance, it pays out automatically based on specific indicators. This means no lengthy assessments or disputes are required.

The process is faster and more transparent than traditional methods. Smallholder farmers need quick access to funds after disasters like droughts. Delays can hinder their ability to recover and replant.

Currently, parametric insurance in Ghana is still developing but gaining traction. Pilot programs using weather-indexed products show promise when combined with other services like financing or advice.

Mobile money integration has improved premium collection and payouts in remote areas. The goal now is to scale these early successes within the agricultural sector.

Scaling parametric insurance requires an ecosystem approach. Farmers do not operate in isolation; neither should insurance solutions.

When offered alongside improved seeds and credit access, insurance supports growth rather than just compensation. With insurance, farmers can take calculated risks and invest in productivity.

The government plays a crucial role in this transformation process. Ghana's leadership in digital infrastructure positions it well for inclusive Insurtech solutions.

However, deliberate efforts are necessary for success. Public-private partnerships can help subsidize premiums for vulnerable populations.

Investments in data infrastructure are essential for accuracy and credibility of index-based products. Regulatory frameworks must adapt to protect consumers while fostering innovation.

Ghana’s Ministry of Food and Agriculture is working on these reforms with partners like the National Insurance Commission. The Ghana Agricultural Insurance Pool (GAIP) serves as an example of local innovation.

To achieve true scale, the sector must embrace digital transformation fully. Technology players can help automate processes while reducing operational costs.

Embedding insurance into climate adaptation strategies is also vital for resilience against disruptions caused by climate change.

Building trust among farmers is equally important since many view insurance as abstract or confusing due to past experiences with claims delays or misunderstandings about products.

Designing with empathy—using local languages and engaging cooperatives—can help build trust effectively at every stage of communication.

Ghana has the potential to lead regional agricultural Insurtech initiatives due to its growing tech ecosystem and Fintech sector strength.

By investing in tailored Insurtech solutions powered by local data, Ghana can shift from vulnerability to proactive resilience across Africa’s agricultural landscape.

Insurance should be viewed as economic infrastructure rather than just a safety net—similar to roads or irrigation systems that enable confident decision-making for farmers today regarding tomorrow's outcomes.

As Ghana transforms its agriculture sector, parametric models must be seen as essential tools—not only for cushioning losses but also for enabling growth opportunities for farmers who aspire beyond mere survival.

Partnerships will be key moving forward along with experimentation and patience as Ghana embraces innovative tools that turn insurance into prosperity drivers.

The future of agriculture relies not only on weather conditions but also on building resilient systems that empower those who feed the nation.